SMSF changes could impact rental market

Changes to regulations surrounding self-managed super funds could ultimately impact on rental affordability, it has been claimed.

The ATO has released a draft ruling opening up the use of SMSFs for renovations on existing properties. Previous ATO regulations restricted SMSFs from undertaking renovations on properties with either debt or surplus funds. The new ruling means SMSF members will be able to access their funds for improvements, provided they do not make any fundamental changes to the nature of the property and do not access any borrowings.

Accounting firm Chan & Naylor said the result would not only benefit SMSF members, but could lead to more rental availability and affordability nationwide as SMSF trustees increasingly put money into investment properties.

Chan & Naylor director Ken Raiss said the changes would allow “Mum and Dad” investors to see better returns by purchasing property and adding to its capital value. He said the ATO’s previous position had discouraged many SMSF trustees from delving into property investment, as the regulations surrounding property investment were too stringent.

“The lesson many astute investors learnt post-GFC is that property is a viable investment alternative to stocks and shares; However, we found many SMSF trustees unwilling to contend with existing policy as it disallowed investors to contribute to asset value without owning the property outright,” Raiss commented.